Legislature(1995 - 1996)
03/16/1995 01:40 PM L&C
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
SENATE LABOR AND COMMERCE COMMITTEE March 16, 1995 1:40 P.M. MEMBERS PRESENT Senator Tim Kelly, Chairman Senator Mike Miller Senator Jim Duncan Senator Judy Salo MEMBERS ABSENT Senator John Torgerson, Vice Chairman COMMITTEE CALENDAR SENATE BILL NO. 108 "An Act relating to the powers and duties of the commissioner of commerce and economic development concerning the Alaska Tourism Marketing Council; relating to the per diem and travel expenses of the council's board of directors; relating to the powers and duties of the council; extending the termination date of the council; and providing for an effective date." SENATE BILL NO. 100 "An Act relating to unfair discrimination against a physician assistant or acupuncturist under a group health insurance policy." SL&C 3/16/95 SB 104 (JOINT INSURANCE ARRANGEMENTS) was scheduled, but not taken up this date. WITNESS REGISTER Mary Jackson, Legislative Aide Senator John Torgerson State Capitol Juneau, AK 998-1-1182 POSITION STATEMENT: Commented on SB 108. John Litton, Vice President Government Relations Alaska Visitors Association 211 Crabapple Dr. Sitka, AK 99835 POSITION STATEMENT: Supported SB 108. Bob Dindinger, Vice Chairman Alaska Tourism Marketing Council 9085 Glacier Hwy., Suite 204 Juneau, AK 99801 POSITION STATEMENT: Supported SB 108. Jeff Bush, Deputy Commissioner Department of Commerce and Economic Development P.O. Box 110800 Juneau, AK 99811-0800 POSITION STATEMENT: Supported SB 108. Nancy Lethcoe, President Alaska Wilderness, Recreation, and Tourism Association Valdez, AK POSITION STATEMENT: Supported SB 108. Fred Dure Adventure Tours 536 W. 19th Anchorage, AK 99503 POSITION STATEMENT: Supported SB 108. Tina Lindgren, Director Alaska Visitors Association 3201 C. St., Suite 403 Anchorage, AK 99503 POSITION STATEMENT: Supported SB 108. Jack Heesch Alaska Academy of Physicians Assistants P.O. Box 201608 Anchorage, AK POSITION STATEMENT: Commented on SB 100. Nick Coti East Care Acupuncture Clinic 230 S. Franklin St. #207 Juneau, AK 99801 POSITION STATEMENT: Commented on SB 100. Don Koch Division of Insurance Department of Commerce and Economic Development P.O. Box 110805 Juneau, AK 99811-0805 POSITION STATEMENT: Commented on SB 100. Rachel Yates Alaska Association of Marriage and Family Therapists 1301 1st Street Douglas, AK 99824 POSITION STATEMENT: Supported SB 100. Charlie Miller Alaska Regional Hospital P.O. Box 102286 Anchorage, AK 99510 POSITION STATEMENT: Commented on SB 100. Jerry Reinwand 2 Marine Way, #219 Juneau, AK 99801 POSITION STATEMENT: Commented on SB 100. Reed Stoops Aetna 240 Main Street Juneau, AK 99801 POSITION STATEMENT: Opposed SB 100. ACTION NARRATIVE TAPE 95-12, SIDE A SL&C 3/16/95 SB 108 ALASKA TOURISM MARKETING COUNCIL CHAIRMAN KELLY called the Senate Labor and Commerce Committee meeting to order at 1:40 p.m. and announced SB 108 to be up for consideration. MARY JACKSON Legislative Aide for Senator Torgerson, said SB 108 extends the Tourism Marketing Council from December of 1996 to December of 1999 and changes some of the contract terms with the Trade Association to coincide with the revised sunset provision. There is some housekeeping about the authority to sign a contract and it directs the Commissioner to contract with a qualified in- state trade association. It deletes language regarding out of state travel expenses for association members. JOHN LITTON, Vice President, Government Affairs, Alaska Visitors Association, said he also sits on the Alaska Tourism Marketing Council and has participated with the Council for the past six years. MR. LITTON said most of the changes in the language has to do with making the Commissioner more directly responsible for the contracting authority. He said he was concerned with the per diem and reimbursement provision. For example, he traveled on behalf of the Council back to New York meeting with travel editors, which is something they annually do, to try to get stories about Alaska placed in different magazines and newspapers nation-wide. This is the trip on which he met the president of ABC Network and talked about bringing Good Morning America to Alaska. Shortly, thereafter, there was an audit of their department and it was brought to their attention that reimbursement for his travel to New York was not appropriate. Travel is specifically supposed to be for in-state council meetings. SENATOR KELLY asked how many board members there were. MR. LITTON replied there was a total of 21 - ten appointed by the Governor, the Director of the Division of Tourism, and 10 that are appointed by the industry. SENATOR KELLY said he has a problem with the paragraph on reimbursing 21 members to travel all over the world by just getting the approval of this trade association. BOB DINDINGER, Vice Chairman, Alaska Tourism Marketing Council (ATMC), said originally that provision was in the statute so that the Marketing Council would not have its regular meetings outside the State of Alaska. SB 108 proposes, not to reimburse members for attending the meetings outside the state, but to reimburse a member who is sent by the council to sell Alaska. They have no intention of holding meetings outside of Alaska. He also explained that only the council members appointed by the Governor are reimbursed for attending meetings. The 10 industry members are never reimbursed at state expense. JEFF BUSH, Deputy Commissioner, Department of Commerce and Economic Development, pointed out that lines 7-9 on page 2 state that if board members appointed by the trade associations receive per diem and travel, the trade association has to reimburse the council for it. MR. DINDINGER said reauthorization of the ATMC was appropriate in the Labor and Commerce Committee, because it's an issue about jobs - about 27,000 primary Alaskan jobs and over 50,000 total Alaskan jobs. He said this is the only state sponsored program that addresses the 92% of Alaska visitors that come from the continental United States and Canada. It addresses visitor demand by all modes of transportation and the needs of both independent travelers and package tour travelers. In other words, it is a very generic program. The primary vehicle of this program is print advertising which consists of approximately 650,000 names to which the Vacation Planner is sent. The Vacation Planner lists over 1,000 Alaskan businesses and the nature of their services. He concluded saying that they highly recommend reauthorization of the Marketing Council. The money is well spent and it is well managed. Number 154 SENATOR KELLY asked if the Marketing Council was funded as a line item in the Department of Commerce budget. MR. DINDINGER replied that was correct and last year it was about $3,800,000 from the general fund with a 25% match from the industry. SENATOR KELLY asked what trade association they currently had a trade agreement with. MR. DINDINGER said that the Alaska Visitors Association was the only one that has ever had a joint management agreement with the state. They are limited to three state employees. SENATOR KELLY said he was the one to put that limit in. SENATOR KELLY asked if the Marketing Council had the budget in their control. MR. DINDINGER answered that it was and that it was managed under the state procurement system. Number 210 SENATOR MILLER noted that over the years he has been a critic of the Alaska Tourism Marketing Council, because they had a tendency to promote just one mode of transportation. However, he is a co- sponsor of this legislation, because they have done a tremendous job of including all other modes of transportation. NANCY LETHCOE, President, Alaska Wilderness, Recreation, and Tourism Association, pointed out that they support reauthorization of ATMC. They are concerned with the definition of a qualified trade organization, because although the current definition allows without limitation the composition of the ATMC, only those listed specifically are appointed. Those that are covered by the generic words "without limitation" do not have representation. She hoped for an amendment with a new definition to fine tune this program to make it better for small Alaskan owned and operated businesses. She also would like to see changes to section c, which is in the House version of this bill, that would give the Governor the opportunity to appoint more members to ATMC and reduce the number that are from the one trade organization. She wanted expertise brought to the table from people who are specialists in hunting, sportfishing, wilderness guides and outfitters. FRED DURE, Adventure Tours, supported reauthorization of ATMC. He supported Ms. Lethcoe's comments about the definition of a qualified trade association. As Alaskan tourism grows, it will be to all of Alaska's benefit to insure that all types of visitors are addressed in the marketing of their destination. Number 332 TINA LINDGREN, Director, Alaska Visitors Association, supported SB 108. She can't see any problem with adding to the definition, but there would still be many segments that would be left out like, gift shops, camp grounds, food and beverage companies, and sight seeing tours. She pointed out that it is currently part of the law that the Governor shall ensure that appointees are broadly representative of the different regions of the state and the various sectors. SENATOR KELLY asked if she currently authorizes travel for AVA board members outside the conventions and such. MS. LINDGREN replied that AVA doesn't reimburse their board members for travel. The appointees that AVA has on the ATMC pay their own way to all of the meetings. MR. BUSH supported SB 108. He said it's been a successful partnership and has done a very good job on tourism marketing. He requested changing "shall" on page 1, line 11, to "may" saying that everyone supported the change. He explained that the legislature, in passing this legislation, is essentially deciding it is in the best interest of the state to have a cooperative marketing program and they agree. However, in taking out the best interests language, there would essentially be no discretion for the department with respect to entering into this contractual arrangement. That language provides the opportunity to negotiate if there is something inappropriate in a contract. Number 400 SENATOR SALO moved to amend SB 108 on page 1, line 11 to change "shall" to "may." There were no objections and it was so ordered. SENATOR KELLY said he still has a problem with allowing board members to travel around the world when their primary business is tourism. He thought they should pay for their own travel. SENATOR KELLY asked Mr. Dindinger if he reimbursed Marketing Council members for their travel to meetings. MR. DINDINGER said the paid staff of ATMC (who are state employees) are reimbursed for their travel to the meetings, as are the Governor's appointees. He said all of the board members are reimbursed for their costs to attend the meetings, but the AVA has to reimburse the state for its appointees. SENATOR SALO asked what was their budget for out of state travel. MR. DINDINGER said he would have to get that information. SENATOR KELLY asked if the Governor's appointee members had been reimbursed for traveling outside the State of Alaska on these types of jobs. MR. DINDINGER answered not to his knowledge. He said when someone is traveling on behalf of the Marketing Council, they don't get to represent their own business. They can only represent the collective interest of the travel community within Alaska. He said they do send people out on those kinds of assignments. The problem is that it is enough of a burden on the private sector people to attend the meetings at their own expense, but when they are asked to dedicate a week to 10 days of their time to travel around the country on the state's behalf and to pay for the travel expense, that's a bit much. He said they are often not able to get the people they would like to do that. SENATOR KELLY said wasn't that what they had full time employees for. MR. DINDINGER said some board members had greater depth of experience and better contacts than the employees did. Number 457 TINA LINDGREN explained what brought this situation about, in particular, was Good Morning America. It's very rare that a council member is asked to do work on behalf of the state. The way legislation is currently written they can send any person in the state except for members of the council, and reimburse their travel. She said their auditors suggested they change the statue, because right now, as it stands, they are inhibiting the council's ability to do the work they have been assigned to do. SENATOR SALO asked for a ballpark figure how much the change in the statute would cost. MS. LINDGREN replied that it shouldn't change the budget at all. Currently, there's $55,000 set aside for travel that probably won't be entirely used. She guessed they were talking about a $10,000 for council member travel for one or two trips to New York or the West Coast during a year. Number 483 MR. LITTON clarified that a board member does not have the ability to just decide they want to go and participate in something and come back. Any travel that is done by a board member has to be approved by the department prior to the travel, like in any other department. SENATOR KELLY said he wanted to have more comfort that there wouldn't be increased travel activity in the future because of the change in this law. SENATOR KELLY said they would hold the bill for amendments on Tuesday. SB 100 DISCRIMINATION UNDER GROUP HEALTH INS. SENATOR KELLY announced SB 100 to be up for consideration and noted there was a proposed committee substitute. He said there were three sections to this bill and started with the physician's assistants. JACK HEESCH, Alaska Academy of Physician's Assistants, said he thought this bill would prevent discrimination by group health insurers among physician's assistants (PA). This means if a person is licensed by the State of Alaska as a state licensed practitioner and is covered under group policy, then all people with similar licenses must be paid for services. He believed the bill did not mandate or require coverage of physician's assistant services; it merely says that if an insurer covers PA service, then they must cover all PA's without discriminating among them. MR. HEESCH said the fiscal affects of this bill are $0. He also pointed out that this bill did not have adverse comment when it was introduced last year, nor has it this year. This specific statute was amended in 1992 to provide for psychologists and psychological associates and again, in 1994, to include certified direct entry midwifes - both without adverse comment. NICK COTI, East Care Acupuncture Clinic, supported SB 100. He said his wife is an acupuncturist and a medical doctor and received her training in China. He said he has recently completed one and half years of graduate study in China and he found that macro economic information supports how effective acupuncture is, not only as a mode of treatment, but as a means of containing costs. Life expectancy, health care, and some other things are better in China than in Washington, D.C., one study concluded. The World Bank has conducted studies on the nature of the Chinese currency and its value in the economy, in general. It was found that there was a very reliable correlation between life expectancy and per capita income. At that time, China had a per capita income of $250 and a life expectancy of 70 years. One would predict, with a per capita income of $250, a life expectancy of something like 50 years. A life expectancy of 70 years is more consistent with an advanced industrialized economy. One of the reasons for this is that they have a fully integrated western and Chinese medical system. The use of both is encouraged interchangeably. Current insurance laws make it difficult for people to get acupuncture, because they have to pay fully out of their pocket to do so. TAPE 95-12, SIDE B MR. COTI asked the committee to consider very seriously the importance of taking discrimination against acupuncturists. He also pointed out that many acupuncturists are receiving either directly or indirectly support from insurance companies through other people who bill for them which is not a very good practice. SENATOR KELLY said they would go on to the third section of the proposed committee substitute. DON KOCH, Division of Insurance, commented that there has been a litany of providers added to this section of law over the years. He explained that his department's position on section 1 is that if the provider is performing a service that is covered under a group insurance health policy, and that service is within the scope of his occupational license and practice, then the insurance company should not be able to discriminate against that person. This does not mandate to the insurer that they provide a specific kind of coverage that is particular to one practitioner. It does say that if whatever you do provide coverage for can be provided by multiple kinds of practitioners, then you have to treat them equally. MR. REINWAND, Blue Cross, asked if this means you can't have preferred provider arrangement with different fee schedules within a group like doctors and hospitals. MR. KOCH replied that at this time, he believed there does not exist authorization for preferred provider arrangements in statute - with the exception that, in the case of hospital medical service corporations (for example Blue Cross and Blue Shield), they are directly the provider who through contracts with practitioners provide a service. So you can have, in effect, a different level of coverage for the entity with whom the Blue Cross, Blue Shield, Hospital Service Corporation, is in contract with versus the piece in their policy that provides for indemnification for other kinds of services that they're not under contract with a provider for. SENATOR SALO asked when he talked about "not discriminating" did he mean between providers within the same category or between a variety of providers like acupuncturist, medical doctors, etc. MR. KOCH replied that it was between all the different providers. He explained that typically a hospital medical service corporation will enter into contracts with hospitals and, generally, with medical doctors. They may have arrangements in some cases where they go to other practices as well. In that case, you're going to have a level of care that can be stated in the policy that may be greater than the level of care you would provide on an indemnification basis. He said they may limit coverage to the care provider who was "first in line" to give treatment. Number 501 SENATOR DUNCAN asked if Mr. Heesch agreed with Mr. Koch's testimony. MR. HEESCH answered that he didn't. SENATOR DUNCAN restated that Mr. Heesch's understanding of adding physician's assistants meant you have to treat all physician's assistants the same. What Mr. Koch's understanding of the unfair discrimination is that if you have a headache, you should be able to go to anyone who is licensed to practice in the state who could cure that headache. MR. KOCH replied that was correct. SENATOR DUNCAN asked if the list of providers is necessary to be included in the bill. MR. KOCH replied that he would take out the list of providers and put in some generic language that says, "if the practitioner is operating within the scope of his license, and the event that is triggering his care is within the scope of his practice." SENATOR DUNCAN asked if that had been suggested in the past, because there is the problem of continuously adding to the list and then there are providers who aren't being recognized by the insurance industry, although they are certified and licensed. MR. KOCH answered no, their deputy director, Thelma Walker, recently asked the same thing. SENATOR DUNCAN said just adding "physician assistant" wasn't solving the problem the physician assistants were concerned with. MR. KOCH agreed and said there was one more issue which is, in some cases, some of the items have been added to the list, but the scope of practice is not particularly clear. SENATOR KELLY announced an at ease at 2:35 - 2:43. RACHEL YATES, Alaska Association of Marriage and Family Therapists, said they are licensed clinical professionals and provide a comparable service to psychological associates and clinical social workers. She asked to be added to the list in the bill. CHARLIE MILLER, Alaska Regional Hospital, supported SB 100. Alaska Regional Hospital has a very well defined scope of service. They are well established, highly regulated, certified, and licensed facilities. They are primary providers of health care in the state and requested to be added to the list of providers. MR. MILLER noted there was a question about them being an institution rather than an individual, but he did not think this was significant. SENATOR SALO said it looked like listing hospitals would start a whole other list, because there are nursing homes, clinics, etc. MR. MILLER said that usually a clinic is included with a physician's billing. SENATOR SALO said that wasn't necessarily the case, because many clinics offer surgical services where they do bill separately. SENATOR SALO said some insurance companies prefer using Providence in Anchorage and asked if that would be prohibited. MR. MILLER said a lot of programs are regulated by federal law. There are no provisions for preferred provider agreements in the indemnity insurance, as Mr. Koch said, in AS 21.36.090. The ones that are allowed are in AS 21.87. MR. KOCH added that AS 21.36.090 does apply to both an insurance company and a medical service corporation. The reason is because there is a reference in 21.87 back to 21.36. saying it picks it up. In addition, there is language that talks about "group disability policy" and "group service for an indemnity type contract." "Group service" is the language that should be used to pick up the contract that a hospital medical service corporation uses; and the term "policy" used for the contract and insurance companies issues. Both are covered by the language in AS 21.36.090. SENATOR DUNCAN asked if he was saying that nowhere in statute is there a provision for preferred provider networks in this state for insurers, for example, Aetna. MR. KOCH agreed, but said Blue Cross and Blue Shield could, because they are a medical service corporation. The way they could be viewed as a preferred provider is that those that they enter into a contract with to provide services may be recompensed under their contract at a different level than those they don't have a contract with, but have the ability to be picked up as an indemnifier. SENATOR DUNCAN commented, then, that under the way our statutes are presently written, and with the movement towards managed care networks in the country, Alaska is really in a very weak position to have managed care. MR. KOCH said that was absolutely correct and if this is what they want, he has a copy of a model bill that may address that issue. SENATOR KELLY asked how this affects the arrangement that Aetna has with Providence Hospital. MR. KOCH said he contends that Aetna could enter into those kinds of arrangements with self insurers, because the insurance code provides no impediment to a self insurer. SENATOR DUNCAN asked if they were sure there were no PPO's in this state that are in violation of the law right now. MR. KOCH replied that no, they are not. If there are PPO's written by insurers of this state, they may well be in violation of the statutes. REED STOOPS, Aetna, said that Aetna does have PPO agreements, and have had them for years in Alaska. They believe the statute permits those agreements. The Division of Insurance has approved policies with those provisions and there has never been any attempt to prohibit Aetna from doing it. MR. STOOPS said there are other statutes in other states that have litigated this question before and courts have determined that unfair discrimination does not mean that one cannot have a PPO agreement. What he thought the issue really was, was an attempt by Alaska Regional Hospital to clearly prohibit a PPO agreement. He thought PPO agreements were in the public interest; they are common practice in the rest of the country and provide lower cost insurance for Aetna's clients. Number 334 SENATOR DUNCAN asked if the Municipality of Anchorage is self- insured. MR. STOOPS said they are not self insured. SENATOR DUNCAN asked who their contracts are with. MR. STOOPS replied that they have a PPO with Providence, although not for all clients. They also have a PPO agreement with some doctors and dentists in Anchorage. SENATOR DUNCAN wanted to ask the Division of Insurance to respond to the testimony that they have been approving contracts that they think are in violation of the law. Number 284 MR. KOCH responded that they have written to Aetna and told them that these arrangements are not legal; some have been disapproved. If any have been approved, it has happened inadvertently. He said Mr. Stoops is correct that they presented some arguments that place somethings into question. They haven't gone to court to contest it, because there were discussions going on about it in the legislature. MR. STOOPS said there was no doubt that this particular amendment will strengthen the case. He said he would like to have someone from Aetna testify about which customers are included under PPO arrangements now. JERRY REINWAND, Blue Cross, said he thought there were a couple of issues here: what the existing law says, what the legislature thought it said, and what the division says it says. He thought he heard the division say that the section in existing law is really a mandate. If you are on the list, you're mandated to cover that scope of practice. He suggested getting the division's interpretation of what the existing law is. MR. REINWAND said he would like to know what this amendment does to Blue Cross and other providers and does it mean they have to void their existing PPO arrangement with Providence's other providers. Third, he wanted to know the public policy on this and if this is the right direction to go. The whole trend is toward managed care to try to bring costs down and this appears to be going in the other direction. SENATOR DUNCAN said the real question on managed care is are we really reducing costs or increasing costs by adding layers of bureaucracy. MR. REINWAND said there is a question of discrimination within a group and, then, whether it applies to Blue Cross or not is another public policy question. If it's discrimination between groups, does that apply to services. If a physician provides a service, and an acupuncturist provides the same service and they get a bill from both, do they say no to one and pay the other. SENATOR SALO said she wanted to know what the affect would be of going to the generic language rather than the specific list. SENATOR KELLY said they would find that out for next Thursday and adjourned the meeting at 3:05 p.m.